In an estate planning context, the acronym QTIP stands for a qualified terminable interest property trust. In this post we will look at the value of the QTIP trust.
Protecting Children From Previous Marriages
Estate planning is an ongoing process. The estate plan that you originally create is going to be constructed in light of circumstances that exist at that time. Things change over the years, and significant life changes will invariably render your existing estate plan obsolete.
A very profound life change that many people go through is a change in marital status. When you get remarried, you are probably going to want to revise your existing estate plan.
Those who have children from previous marriages are going to have a certain set of concerns. How do you provide for your new spouse in your estate plan without jeopardizing inheritances that you want to leave to your children?
One possibility would be the creation of a QTIP trust.
Qualified Terminable Interest Property Trusts
When you create a qualified terminable interest property trust your spouse is going to be the primary beneficiary of the trust. If you do in fact predecease your spouse, he or she may receive monetary distributions from the earnings of the trust throughout his or her life.
Since the purpose of the trust is to protect the interests of your children, you name your children as the successor beneficiaries when you are creating the trust agreement. Your surviving spouse will not have the legal authority to change the terms of the trust.
The children that you name in the trust agreement as successor beneficiaries will inherit the assets that are contained within the trust after the death of your surviving spouse.
When you create a QTIP trust you are tending to all of your responsibilities. You are making sure that your surviving spouse has income for the rest of his or her life, and you are simultaneously protecting the interests of your children.
Additional Food for Thought
If you are getting remarried as a parent, you may want to consider a prenuptial agreement. When you look at the statistics, you see a compelling picture. Most second marriages simply do not last, and third marriages fail more frequently than second marriages.
Clearly, you are getting married because you are in love, and you expect the marriage to endure the test of time. Of course, the people who comprise the statistics probably felt the same way.
Estate Planning for Blended Families
If you would like to discuss estate planning for blended families with a licensed attorney, contact us to schedule a free consultation. You can request an appointment through our contact page.